Dec. 12 (Bloomberg) -- Singapore Airlines Ltd. rose to the
highest in almost three months on the city’s stock exchange
after agreeing to sell its stake in Virgin Atlantic to Delta Air
Lines Inc.

Delta will buy the 49 percent shareholding for $360 million,
according to a stock exchange filling late yesterday. Singapore
Air will book an S$322 million ($264 million) gain from the sale,
after accounting for a writedown in its investment in the U.K.
carrier controlled by billionaire Richard Branson.

Singapore Air is exiting Virgin after more than a decade as
it sharpens its focus on faster-growing Asia-Pacific markets.
The carrier has ordered 54 Boeing Co. 737 planes to double the
size of regional unit SilkAir and bought a stake in Virgin
Australia Holdings Ltd., that nation’s second-largest carrier.

“We are positive on the deal as it helps unlock the hidden
value from a long-held asset,” Morgan Stanley analysts Edward
Xu and Chin Ser Lee said in a note to investors. The Virgin
investment has “yielded limited returns and synergies.”

Singapore Air, which already has more than S$4 billion of
cash in hand, may use the sale proceeds for a special dividend,
share buyback or investment in other carriers, the analysts said.
It could also use the funds as buffer against capital spending
plans totaling about S$6.75 billion, they said.

The airline rose 1.1 percent to close at S$10.87, the
highest since Sept. 21. The benchmark Straits Times Index gained
0.8 percent.

‘Not Performed’

Singapore Air bought the stake for S$1.65 billion, Germaine
Shen, a spokeswoman, said by e-mail.

The investment “has not performed to expectations,” the
carrier said yesterday. “The synergies the parties originally
hoped for have not materialized.”

The airline expects to maintain commercial ties with Virgin,
such as codeshares and frequent-flier tie-ups.

Delta, based in Atlanta, is buying the Virgin stake to
increase its presence on lucrative trans-Atlantic routes. The
two carriers intend to begin a joint venture on 31 daily round-trip flights between North America and the U.K. taking advantage
of Virgin’s base at London’s Heathrow airport, Europe’s busiest.